Business Analysis: Chipotle Mexican Grill
Chipotle Mexican Grill
Introduction.
Chipotle Mexican grill is an American owned firm which has been in operation for more than two decades. Its main products is tacos and burritos and it is listed on the stock exchange (Fedenia & Hirschey 2009).
Competitive advantage
A competitive advantage can be described as condition or a factor that enables an organization to offer real or perceived value better than its competitors. (Porter 2008) The first major strength is its product differentiation, the food chain focuses on organic foods by ensuring that its meat is naturally raised and the ingredients are organic. This is in line with current trends where customers are more aware and advocating for healthy foods.
The second major competitive advantage is …show more content…
the good relationship with the suppliers especially in the organic sector. By putting emphasis on the protecting animals and healthy organic foods many farmers would want to align themselves with this firm since their products are bound to fetch higher prices.
The other major competitive advantage is the fact that it maintains ownership of all its restaurants. This is important since quality can be easily checked and controlled unlike in franchising. Franchising can lead to disclosing of formulas and ingredients which can benefit competitors.
The other major competitive advantage is the number of outlets the firm owns and their geographical location. The firm has over 1000 restaurants in USA, Canada and UK among others, this will ensure that the firm stays afloat despite any economic challenges in one region.
Strategic problems
The first major challenge emanates from its global operations, it does not franchise its operations, and although franchising has its own challenges, entering into foreign markets may require experience in the local tastes and preferences. The existing local competition might prove difficulty to beat considering their experience and goodwill among local customers. Also some recipes and ingredients might be difficulty to sell due to cultural values and in some cases legal restrictions. Extra taxation for foreign companies means the cost of doing business high
The second challenge is the changing tastes and preferences among the customers. The food industry is very dynamic and new recipes and products are coming up every day. This calls for continued research and review of the company’s product. It also calls for aggressive marketing and promotion to maintain brand loyalty. So far the firm is handling this quite well and for instance the introduction of organic tofu to attract vegetarian customers (Brizek& Dosser).
The other major challenge is the competition of local resources specifically supplies from other restaurants. Some of the ingredients might not be locally and readily available in the foreign markets. Economies of scale can be hard to achieve since major suppliers have full orders and therefore this leads to sourcing from small scale farmers and sometimes groceries which leads to high purchase cost with no quantity discounts.
The other major challenge comes from the product differentiation strategy, the chain of restaurant prides itself in organic foods, and however sometimes sticking to this strategy can be difficulty considering the increased demand for organic foods in the economy.
This sometimes forces the firm to sometimes source genetically modified foods in order to offset the deficit. This is a direct threat to the ethical setting of the brand.
Factors affecting Chipotle Mexican Grill
The growing concern for healthy food is an opportunity to the food chain. They have successfully exploited this opportunity and positioned themselves as market leaders. This niche is futuristic and is bound to continue expanding and this to them is a great opportunity.
The increasing global food prices food prices possess a major threat. This increase in food prices sometimes cannot passed to the consumers since sales will decline. This negatively affects the profit margin.
Weather changes and natural calamities are other major forces which affect this chain of restaurants, organic foods are very depended on various weather conditions. Good weather conditions will lead increased supplies while adverse weather conditions will lead decreased
supplies.
The changes in economic conditions are also important, recession and income cuts will lead to low disposable income and therefore less spending which will lead to automatically decline in sales as well as seeking cheaper alternatives.
Recommendations
Backward integration is a common practice among industries using farm products. Providing education, implements and financial incentives to the local farmers can come handy in ensuring that the firm does not run out of supplies.
Technological Innovations in the ordering, delivery and payment system is competitive edge to the company, the use of credit cards and online ordering apps ensures that customer experiences convenience.
Sales and promotion campaigns is very crucial in the food industry, the branding should be right always and unique since there is ease of entry into the organic food business and it has attracted many.
Education to the customers about the benefits of organic foods can be a good initiative. Brochures and leaflets can be placed on the packaging to ensure that the customers get informed on the benefits of the various products hence better relationship.
Continued research is key to survival in the industry, new recipes and products come up every day, customer preferences change often, this ought to be captured earliest possible and aligned to the company’s strategy.
Employee policy is important so as to maintain a motivated staff. Keeping talent call for a continuous review of the human resource policy since competition for skilled and experienced staff is high in the industry.
Introduction.
Chipotle Mexican grill is an American owned firm which has been in operation for more than two decades. Its main products is tacos and burritos and it is listed on the stock exchange (Fedenia & Hirschey 2009).
Competitive advantage
A competitive advantage can be described as condition or a factor that enables an organization to offer real or perceived value better than its competitors. (Porter 2008) The first major strength is its product differentiation, the food chain focuses on organic foods by ensuring that its meat is naturally raised and the ingredients are organic. This is in line with current trends where customers are more aware and advocating for healthy foods.
The second major competitive advantage is …show more content…
the good relationship with the suppliers especially in the organic sector. By putting emphasis on the protecting animals and healthy organic foods many farmers would want to align themselves with this firm since their products are bound to fetch higher prices.
The other major competitive advantage is the fact that it maintains ownership of all its restaurants. This is important since quality can be easily checked and controlled unlike in franchising. Franchising can lead to disclosing of formulas and ingredients which can benefit competitors.
The other major competitive advantage is the number of outlets the firm owns and their geographical location. The firm has over 1000 restaurants in USA, Canada and UK among others, this will ensure that the firm stays afloat despite any economic challenges in one region.
Strategic problems
The first major challenge emanates from its global operations, it does not franchise its operations, and although franchising has its own challenges, entering into foreign markets may require experience in the local tastes and preferences. The existing local competition might prove difficulty to beat considering their experience and goodwill among local customers. Also some recipes and ingredients might be difficulty to sell due to cultural values and in some cases legal restrictions. Extra taxation for foreign companies means the cost of doing business high
The second challenge is the changing tastes and preferences among the customers. The food industry is very dynamic and new recipes and products are coming up every day. This calls for continued research and review of the company’s product. It also calls for aggressive marketing and promotion to maintain brand loyalty. So far the firm is handling this quite well and for instance the introduction of organic tofu to attract vegetarian customers (Brizek& Dosser).
The other major challenge is the competition of local resources specifically supplies from other restaurants. Some of the ingredients might not be locally and readily available in the foreign markets. Economies of scale can be hard to achieve since major suppliers have full orders and therefore this leads to sourcing from small scale farmers and sometimes groceries which leads to high purchase cost with no quantity discounts.
The other major challenge comes from the product differentiation strategy, the chain of restaurant prides itself in organic foods, and however sometimes sticking to this strategy can be difficulty considering the increased demand for organic foods in the economy.
This sometimes forces the firm to sometimes source genetically modified foods in order to offset the deficit. This is a direct threat to the ethical setting of the brand.
Factors affecting Chipotle Mexican Grill
The growing concern for healthy food is an opportunity to the food chain. They have successfully exploited this opportunity and positioned themselves as market leaders. This niche is futuristic and is bound to continue expanding and this to them is a great opportunity.
The increasing global food prices food prices possess a major threat. This increase in food prices sometimes cannot passed to the consumers since sales will decline. This negatively affects the profit margin.
Weather changes and natural calamities are other major forces which affect this chain of restaurants, organic foods are very depended on various weather conditions. Good weather conditions will lead increased supplies while adverse weather conditions will lead decreased
supplies.
The changes in economic conditions are also important, recession and income cuts will lead to low disposable income and therefore less spending which will lead to automatically decline in sales as well as seeking cheaper alternatives.
Recommendations
Backward integration is a common practice among industries using farm products. Providing education, implements and financial incentives to the local farmers can come handy in ensuring that the firm does not run out of supplies.
Technological Innovations in the ordering, delivery and payment system is competitive edge to the company, the use of credit cards and online ordering apps ensures that customer experiences convenience.
Sales and promotion campaigns is very crucial in the food industry, the branding should be right always and unique since there is ease of entry into the organic food business and it has attracted many.
Education to the customers about the benefits of organic foods can be a good initiative. Brochures and leaflets can be placed on the packaging to ensure that the customers get informed on the benefits of the various products hence better relationship.
Continued research is key to survival in the industry, new recipes and products come up every day, customer preferences change often, this ought to be captured earliest possible and aligned to the company’s strategy.
Employee policy is important so as to maintain a motivated staff. Keeping talent call for a continuous review of the human resource policy since competition for skilled and experienced staff is high in the industry.